The IEA Has Cut Its Oil Demand Growth Forecast for 2024

• The IEA cut its 2024 oil demand growth forecast by 140,000 bpd due to weak consumption in developed economies.
• Weak industrial activity and a mild winter led to lower gasoil consumption, particularly in Europe.
• The IEA's revised forecast is significantly lower than OPEC's prediction of 2.25 million bpd growth in 2024.

Global oil demand growth is expected at just 1.1 million barrels per day (bpd) this year, due to weak first-quarter consumption in developed economies, the International Energy Agency (IEA) said on Wednesday, cutting its growth forecast by 140,000 bpd from its assessment last month.

Weak deliveries of middle distillates in Europe and the United States were “enough to tip OECD oil demand in the first quarter back into contraction,” said the agency, whose demand growth projection is now less than half of the growth OPEC expects this year.

The IEA sees 2025 oil demand growth at around 1.2 million bpd, largely unchanged from last month’s view, the agency’s monthly Oil Market Report showed today.

Weak industrial activity and another mild winter have sapped gasoil consumption this year, particularly in Europe, where gasoil consumption fell year-on-year in the first quarter.

“Combined with weak diesel deliveries in the United States at the start of the year, this was enough to tip OECD oil demand in the first quarter back into contraction,” the Paris-based agency said in its report.

The IEA also noted that preliminary data showed further stock builds in April as onshore inventories skyrocketed after oil on water was discharged.

“Increasing trade dislocations had pushed oil on water to a post-pandemic high in March, while onshore stocks were at their lowest since at least 2016. A return to historical average stock levels will be key to avoid renewed market volatility,” the IEA said.

With today’s downward revision to global oil demand growth, the IEA is further widening the gap in projections with OPEC. The agency sees half the growth, at 1.1 million bpd, compared to OPEC’s continued optimistic view of 2.25-million-bpd global oil demand growth this year.

Earlier this week, OPEC kept its 2024 and 2025 outlook of robust oil demand unchanged from last month, due to a resilient global economy early this year with additional upside potential with the possible easing of monetary policies. OPEC maintained its forecast from the April report, which sees global oil demand rising by 2.25 million bpd this year and by another 1.85 million bpd next year.  

By Tsvetana Paraskova for Oilprice.com

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